Saving/Applying for a mortgage 2015/16/17/18/19

SB_Part2

TJ Mackie wrote: »

Hi, just looking for some advice.

My fiancé and I have started saving for a house. We’re in our late 20s. Don’t have any substantial savings as it is but we reckon we can save between €50-€60k in 3 years if we are disciplined. The whole notion of getting a mortgage and what’s involved is alien to me, but I guess my main questions are:

1. What are some crucial things you wish you knew at the start of your process – i.e. anything that I should know now rather than find out the hard way?

2. If we are able to save €1500 a month for 3 years in addition to paying rent of €1400 a month for 3 years, how favourable would that look on a mortgage application? Do they even acknowledge what you have been paying in rent or is it purely what you’ve been able to save?

3. I’m not confident I have a great credit history – I got deep into my credit card about 2 years ago (I was always flirting with my max €4k limit) and though I never missed a payment, it was often a case of making my payment then spending straight away. I got the balance a little bit under control, and was able to pay off the lump sum balance thanks to a cash gift from my parents. I closed my Credit Card account as soon as it was cleared. I’ve been in my overdraft for about 18 months at this stage (max €2.8k) and will have it cleared by my PayDay at the end of the month (i.e. I expect to have my balance back to zero before my wages hit my account, so I don’t expect to have to use my overdraft again – indeed my first port of call will be to give myself a far lower limit). How big of a deal is all this? And would it be a big deal in 3 years time, assuming we’ve evidenced the above mentioned 3 years’ worth of saving? i.e. would 3 years perfect credit go any great way to helping me?

Really appreciate any advice!

Thanks

If you are constantly in your overdraft you haven't a hope of getting a mortgage.

Be overdraft free, paying rent and saving consistently for 12 months and you won't have an issue getting a mortgage.

Lumen

SB_Part2 wrote: »

If you are constantly in your overdraft you haven't a hope of getting a mortgage.

You don't get a bad credit rating from using credit facilities like overdrafts and credit cards.

Banks only ask for a six months of statements so you just need to keep things looking tidy for six months and avoid obvious red flags like online gambling.

Arsen5

1. What are some crucial things you wish you knew at the start of your process – i.e. anything that I should know now rather than find out the hard way?

2. If we are able to save €1500 a month for 3 years in addition to paying rent of €1400 a month for 3 years, how favourable would that look on a mortgage application?

3. I’m not confident I have a great credit history – I got deep into my credit card about 2 years ago (I was always flirting with my max €4k limit) and though I never missed a payment, it was often a case of making my payment then spending straight away. I got the balance a little bit under control, and was able to pay off the lump sum balance thanks to a cash gift from my parents. I closed my Credit Card account as soon as it was cleared. I’ve been in my overdraft for about 18 months at this stage (max €2.8k).
Thanks[/quote]
1. Avoid betting/late night out payment using your card as it will show on your statement & banks don't like gamblers or unresponsible people. Also from my experience avoid transfers which can't be explained i.e. money from/to friends or family. Banks like people who are more monotonous i.e. regular salary income regular normal expenses like bills saving rent etc. I learned this the hard way after couple of refusals.
2. Avoid erratic transfers.
3. When you pay rent write clearly the word (rent) as this will show in your bank statement & will be counted as a regular saving.
4. Do a credit check on your self (it's easy you just need your previous addresses & doesn't cost much, if it showed any problem try to clear it with any outstanding payments).

Ayuntamiento

We've always used our overdraft and we use the credit card all the time. We still got approved for a mortgage with no issues. However by the end of the month we have the credit card cleared and are out of the overdraft by a few thousand. It's how you use your credit facilities that counts.

Shelga

Is it necessary to have been paying rent for a while in order to be granted a mortgage? I'm hoping to move home from the UK early next year and would have a medium amount of savings by then. I would then hope to live at home for 6-12 months and save loads more. I want to totally avoid having to rent in Dublin as obviously it's a horrendous market right now.

Would this affect whether banks will lend to me? I've been renting in England for 5 years, both house shares and alone. Thanks!

68 lost souls

Shelga wrote: »

Is it necessary to have been paying rent for a while in order to be granted a mortgage? I'm hoping to move home from the UK early next year and would have a medium amount of savings by then. I would then hope to live at home for 6-12 months and save loads more. I want to totally avoid having to rent in Dublin as obviously it's a horrendous market right now.

Would this affect whether banks will lend to me? I've been renting in England for 5 years, both house shares and alone. Thanks!

I dont see why it would? There are plenty of people that move from their family home to their own home. YOu will need to show that you are saving more each month than the stressed repayments would be though.

SB_Part2

Lumen wrote: »

You don't get a bad credit rating from using credit facilities like overdrafts and credit cards.

Banks only ask for a six months of statements so you just need to keep things looking tidy for six months and avoid obvious red flags like online gambling.

I never said it would affect their credit rating but living in an overdraft is not healthy. And banks can ask for 12 months. KBC and Ulster did when I was applying.

Bored Accountant

Shelga wrote: »

Is it necessary to have been paying rent for a while in order to be granted a mortgage? I'm hoping to move home from the UK early next year and would have a medium amount of savings by then. I would then hope to live at home for 6-12 months and save loads more. I want to totally avoid having to rent in Dublin as obviously it's a horrendous market right now.

Would this affect whether banks will lend to me? I've been renting in England for 5 years, both house shares and alone. Thanks!

I heard, some banks don't take your rent payments into account at all. They only look at your savings.

Our broker told us at the end of the day what the bank looks at, If you take out a mortgage of 200,000 with monthly repayments of 1000, if interest rates were to rise by 2% (worst case) could you still afford to meet the repayments. So if your savings well exceed what the max payment will be, you have shown you can meet the max payments and so that should keep banks happy in regard to that.

When I applied for my mortgage, I had 800 on my credit card (I try clear every month), my OH has personal loan and money owed on CC and there was no issues what so ever, as between the 2 of us we were probably saving 2 grand a month plus paying rent.

Ayuntamiento

It makes no sense that banks wouldn't take your rent payments into account. Any bank that I've been took rent into account.
Essentially they see it as: what you pay in rent + what you save = the amount of money you would have available to put into your mortgage repayments. Then they stress test at rates higher than what's currently out there and if you could still pay a mortgage at those rates, you're a good candidate for borrowing.

It's all the same to the bank whether you live at home and save 3k per month or you rent and pay 1.5k to a landlord and save 1.5k. In both scenarios they've determined that you have 3k available every month to put into a mortgage.

Michael D Not Higgins

Ayuntamiento wrote: »

It makes no sense that banks wouldn't take your rent payments into account. Any bank that I've been took rent into account.
Essentially they see it as: what you pay in rent + what you save = the amount of money you would have available to put into your mortgage repayments. Then they stress test at rates higher than what's currently out there and if you could still pay a mortgage at those rates, you're a good candidate for borrowing.

It's all the same to the bank whether you live at home and save 3k per month or you rent and pay 1.5k to a landlord and save 1.5k. In both scenarios they've determined that you have 3k available every month to put into a mortgage.

But that's not how they do it. It's easier to make sacrifices and go without in the short term to save for a deposit. Banks know this and the amount of rent paid plus savings isn't indicative of sustainable payments over the term of the mortgage.

Sure, paying a level of rent and making savings shows you're a better bet than someone who hasn't done that but the underwriting criteria is not based on this.

Ayuntamiento

I imagine rent and savings are taken into account, but then they deduct a certain percentage from that to represent how much you'll have available when you go back to living/spending like a normal person.

The main point I'm trying to make is that people seem to get themselves into knots about getting a mortgage. We're mortgage approved and it was a really simple process.
Nobody combed through my bank statements and interrogated me about the fact that I spend on my credit card, have an overdraft, make late night purchases, go out to restaurants a few times a week, spend stupid amounts on clothes/make-up, etc. They basically measured my capacity to repay the amount that I would be entitled to under CB rules and that was it.

Utah

When we applied I was very worried about spending habits and I even had a paddy power lodgement which I thought would be questioned. Had AIP in 5 days. Loan offer soon after. We weren't asked one question regarding anything on our accounts.

We simply had proof of monthly savings + rent paid and that was more than our probable mortgage payments when stress tested.

Konata

Has anyone had experience applying for a mortgage with their rental payments being in cash? I'm gathering up all the paperwork and this only occurred to me when reading this thread last night. My statements show regular withdrawals around the same time each month (for the rent) but the amount is almost always different - some months I need pay bills as well, or maybe I'm just taking out cash while at the machine. Essentially, I'm just thinking how will the bank know how much I pay in rent every month and as a result will this pose a problem?

Lumen

SB_Part2 wrote: »

I never said it would affect their credit rating but living in an overdraft is not healthy. And banks can ask for 12 months. KBC and Ulster did when I was applying.

That's interesting. KBC (2015 and 2016) and Ulsterbank (2016) both required only 6 months from us, with both applicants self-employed. They did ask for years worth of company accounts though - I guess for self-employed sustained revenue is more important than income.

whiskeyman

Does anyone have any experience of finding issues on the structural survey that need remediation?

For some things I guess you can let slide, for those that need work in the short term,
Did you go to your solicitor first or just go straight to the vendors EA with something along the lines of:
'we need this fixed as we didn't account for this.... we have a quote for €x to fix it, so we are only willing to close on sale if it's our sale agreed price minus that €x'.

thanks

Laghan

+1
I cleaned up my account in January, ie. Showing regular rent and savings. I had the odd drunken night out using my bank card to pay for rounds, I transferred money to friends and family and sometimes at the end of the month I had very little left.
Added to this, I had a credit union loan the year before with some missed payments that showed up on my ICB. However, I had a really valid reason which I was able to explain and prove to the bank and they approved me the mortgage when I applied in June.
I'm not saying if you have bad credit you'll be fine, but it's not all black and white and my experience in dealing with the bank has been great.

MaudL

Hiya, first post in this thread and I'm already sale agreed

Of course there's a hiccup though. Before starting to look I went to my bank (Ulster Bank) to get an idea of how much mortgage I could get, gave the banker all my numbers including a car loan I had to take on recently, based my hunt on what he said plus savings, and went sale agreed right on budget.

Had to wait for a week for the banker to deign meeting with me to put together the official mortgage application, which is when he told me he made a mistake last time, forgot to take into account my car loan, and could only get me 20K less that the original number! I was so fuming!!!

Anyway, I have no hope to save that much on short notice and my parent can't help.
I can however get the 20K I need from a relative of my ex-husband (don't ask!) but she lives in the US.
Would that be acceptable to the bank do you think? I can only find information relating to gifts from parents that live in Ireland...

Arsen5

MaudL wrote: »

Hiya, first post in this thread and I'm already sale agreed
I can however get the 20K I need from a relative of my ex-husband (don't ask!) but she lives in the US.
Would that be acceptable to the bank do you think? I can only find information relating to gifts from parents that live in Ireland...

We got 10k gift from brother in law in Saudi Arabia!!! No issue what so ever

MaudL

Arsen5 wrote: »

We got 10k gift from brother in law in Saudi Arabia!!! No issue what so ever

Ah that's good, thanks!
Can I ask you a few questions? Please feel free to not answer
- Did you receive the money from your brother-in-law as a bank transfer?
- Did anybody (bank, solicitor, revenue) ask any questions?
- Did you have to pay some sort of tax on it?
- How did you go about legitimizing the gift letter? Did he just write it and send it or did it have to be drafted by his local solicitor?

Thanks!!!

Ayuntamiento

@konata we also made the mistake of paying landlord in cash.

I'd advise you to immediately set up a direct debit to him with 'Rent' featuring in the reference. We showed the bank our lease agreements dating back a few yrs and said that he'd probably write a letter vouching same but they didn't seem to require much proof.

Michael D Not Higgins

MaudL wrote: »

Hiya, first post in this thread and I'm already sale agreed

Of course there's a hiccup though. Before starting to look I went to my bank (Ulster Bank) to get an idea of how much mortgage I could get, gave the banker all my numbers including a car loan I had to take on recently, based my hunt on what he said plus savings, and went sale agreed right on budget.

Had to wait for a week for the banker to deign meeting with me to put together the official mortgage application, which is when he told me he made a mistake last time, forgot to take into account my car loan, and could only get me 20K less that the original number! I was so fuming!!!

Anyway, I have no hope to save that much on short notice and my parent can't help.
I can however get the 20K I need from a relative of my ex-husband (don't ask!) but she lives in the US.
Would that be acceptable to the bank do you think? I can only find information relating to gifts from parents that live in Ireland...

The gift would be subject to CAT at 33% above the threshold. In this case, the threshold is €15,075, assuming by ex-husband you mean you divorced him rather than he passed away, otherwise another threshold may be applicable.

Naid23

Sooooo Just got a house!!!!

In shock would be a total understatement esp considering we actually stopped looking. Estate agent came back to us on a house we bid on a few weeks to see if we were interested in rebidding as previous buyer went sale agreed on a different house and pulled out. Thought feck it why not and got the phone call today to say we got it!!

OMG im gonna be a grown up!! :D:D:D:eek::eek::eek:

whiskeyman

Naid23 wrote: »

Sooooo Just got a house!!!!

In shock would be a total understatement esp considering we actually stopped looking. Estate agent came back to us on a house we bid on a few weeks to see if we were interested in rebidding as previous buyer went sale agreed on a different house and pulled out. Thought feck it why not and got the phone call today to say we got it!!

OMG im gonna be a grown up!! :D:D:D:eek::eek::eek:

Delighted for you Naid!!
Hope you have a smooth process now to get all the other stuff sorted!

Oddly enough, same happened to me, but still can't believe it and won't believe it either.
I've barely told anyone as have been disappointed so many times before.

Here's hoping we'll both be popping champagne (well... cheap fizz once all the money is paid!) in the near future! :pac:

Naid23

whiskeyman wrote: »

Delighted for you Naid!!
Hope you have a smooth process now to get all the other stuff sorted!

Oddly enough, same happened to me, but still can't believe it and won't believe it either.
I've barely told anyone as have been disappointed so many times before.

Here's hoping we'll both be popping champagne (well... cheap fizz once all the money is paid!) in the near future! :pac:

Thats really brilliant. Am delighted for you!! :)
Hope it all goes well for you and no problems.

The house is empty so if all goes well and the seller plays ball then we could have the keys by christmas! Hopefully!! Would be nice to just get started as its gonna take us a bit of work to make it comfortably livable!!

StiffOldMan

Laghan wrote: »

+1
I cleaned up my account in January, ie. Showing regular rent and savings. I had the odd drunken night out using my bank card to pay for rounds, I transferred money to friends and family and sometimes at the end of the month I had very little left.
Added to this, I had a credit union loan the year before with some missed payments that showed up on my ICB. However, I had a really valid reason which I was able to explain and prove to the bank and they approved me the mortgage when I applied in June.
I'm not saying if you have bad credit you'll be fine, but it's not all black and white and my experience in dealing with the bank has been great.

Good man, great to see this positive outcome with a blip on the credit history

StiffOldMan

Konata wrote: »

Has anyone had experience applying for a mortgage with their rental payments being in cash? I'm gathering up all the paperwork and this only occurred to me when reading this thread last night. My statements show regular withdrawals around the same time each month (for the rent) but the amount is almost always different - some months I need pay bills as well, or maybe I'm just taking out cash while at the machine. Essentially, I'm just thinking how will the bank know how much I pay in rent every month and as a result will this pose a problem?

I would recommend you definitely change to direct debit which will show a transaction history on your account. Right now there is no proof of your repayment capacity with cash leaving your account.

hardCopy

StiffOldMan wrote: »

I understand your frustration but you really shouldn't have changed your financial circumstances between approval in principle and drawdown. That is the most sensitive time when applying for a mortgage. If a bank sees any big changes in your circumstances, they will not play ball

We had a mad panic to get funds drawn down so my wife could hand in her notice and take up a job offer she'd been waiting almost two years for. It's a sickener to be left in limbo while the wheels slowly turn.

Arsen5

MaudL wrote: »

Ah that's good, thanks!
Can I ask you a few questions? Please feel free to not answer
- Did you receive the money from your brother-in-law as a bank transfer?
- Did anybody (bank, solicitor, revenue) ask any questions?
- Did you have to pay some sort of tax on it?
- How did you go about legitimizing the gift letter? Did he just write it and send it or did it have to be drafted by his local solicitor?

Thanks!!!

Yes it was bank transfer directly to our account (although the bank didn't bother asking how it got there).
My broker gave me a written form stating the amount, address of property, relationship , and of course to state clearly that he doesn't have any interest in the property (sent by email he signed it & return it back by emails. 10k€ gift is not taxable but honestly I don't know the limit of taxable gift.

Arsen5

Phew!! Finally got the keys today. Since February (when we first applied for a AIP) we went through a lot of stress, disappointments, night of no sleep but finally got there.
This thread have been of great help.

Laghan

I signed the contracts today. Story is that there's a tiny "extension" that should have had planning permission but doesn't. My solicitor had to flag it with the bank and we're currently waiting on a response so see if it's an issue for them giving the mortgage. She will have everything ready to go if we get the green light from the bank.

The other side have demanded signed contracts before close of business tomorrow or they will terminate the sale, problem is we might not have an answer from the bank by then. It's really frustrating, they totally overlooked that extension in their documents and then go demanding the contracts when it's completely out of my control. The solicitor doesn't see the bank having an issue with it (I hope she's right), will they get back to us in time though...and if not, will the seller have pulled out.

Ugh..
I will be completely heart-broken if the house falls through, I really thought we were so lucky all along how things were going so smoothly! Jinxed myself!